Penalty on Airtel Payments Bank for violation of KYC Norms

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CA Mayur Joshi
CA Mayur Joshi
CA Mayur Joshi is a Forensic Accounting evangelist in India. He is the co-founder of Indiaforensic and is author of 7 books on forensic accounting, fraud investigations and money laundering.

Based on the complaints and adverse media reports alleging that the Airtel Payments bank had opened customer accounts without a clear/specific consent of the customers, a supervisory visit to the bank was undertaken by RBI between November 20 and 22, 2017. The supervisory visit report and other relevant documents, revealed, inter alia, contraventions of ‘Operating Guidelines for Payments Banks’ and the directions issued by RBI on Know Your Customer (KYC) norms.

Based on the documents, a Notice dated January 15, 2018 was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with guidelines and directions issued by RBI. After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI guidelines/directions were substantiated and warranted imposition of monetary penalty.

Increasing incidences of penalties for violation of the KYC norms by the banks, financial institutions and payment banks underline the importance of the Certified KYC Expert program offered by the Indiaforensic.

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